The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. Structuring Gainsharing Arrangements and Bundled Payments: Latest Developments Complying With Legal and Regulatory Requirements, Overcoming Implementation and Operational Challenges Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific THURSDAY, DECEMBER 10, 2015 Presenting a live 90-minute webinar with interactive Q&A Curtis H. Bernstein, CPA/ABV, ASA, CVA, MBA, Pinnacle Healthcare Consulting, Centennial, CO Joane Goodroe, RN, BSN, MBA, Independent Consultant, Joane Goodroe Healthcare Services, Peachtree Corners, Ga. William T. Mathias, Principal, Ober | Kaler, Baltimore
Transcript
The audio portion of the conference may be accessed via the telephone or by using your computer's
speakers. Please refer to the instructions emailed to registrants for additional information. If you
have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Structuring Gainsharing Arrangements
and Bundled Payments: Latest Developments Complying With Legal and Regulatory Requirements,
Overcoming Implementation and Operational Challenges
William T. Mathias, Principal, Ober | Kaler, Baltimore
Tips for Optimal Quality
Sound Quality
If you are listening via your computer speakers, please note that the quality
of your sound will vary depending on the speed and quality of your internet
connection.
If the sound quality is not satisfactory, you may listen via the phone: dial
1-866-819-0113 and enter your PIN when prompted. Otherwise, please
send us a chat or e-mail [email protected] immediately so we can address
the problem.
If you dialed in and have any difficulties during the call, press *0 for assistance.
Viewing Quality
To maximize your screen, press the F11 key on your keyboard. To exit full screen,
press the F11 key again.
FOR LIVE EVENT ONLY
Continuing Education Credits
In order for us to process your continuing education credit, you must confirm your
participation in this webinar by completing and submitting the Attendance
Affirmation/Evaluation after the webinar.
A link to the Attendance Affirmation/Evaluation will be in the thank you email
that you will receive immediately following the program.
For additional information about continuing education, call us at 1-800-926-7926
ext. 35.
FOR LIVE EVENT ONLY
Gainsharing Arrangements and Bundled Payments: Latest
Developments
Discussion of problems that gainsharing and bundled payment are trying to address
Identifying legal considerations in gainsharing and bundled payment arrangements
Gaining an awareness of existing gainsharing and bundled payment models and demonstrations
Reviewing FMV considerations and structural guidance
Agenda for Today’s Webinar
5
Misalignment of incentives between hospitals and physicians
Hospitals and physicians are generally paid separately for care provided in hospitals
Physicians often control the use of supplies and selection of devices, but these items are paid for by hospitals
• No financial incentive for physicians to provide more efficient care and decreasing hospital costs.
Gainsharing is contractual arrangement that allows hospitals and physicians to share cost savings from increased efficiency.
Gainsharing
6
Bundled payment is a single, fixed payment for a package of services delivered by multiple providers during an episode of care.
• For example, in knee replacement, the bundled payment may include the cost of the surgeon, anesthesiologist, hospitalist, inpatient stay, device and treatment complications, including readmission occurring during a defined period.
Bundled payment arrangements often include gainsharing.
ACO model differs because it is focused on care provided to entire population of patients, not a particular episode of care
Civil money penalty (CMP) against hospital payments to reduce or limit services
Stark physician self-referral law
10
Fundamental Criteria for Evaluating Gainsharing & Bundled Payments
Additional Cost
Over, Under, and Mis-Utilization
Quality of Care
Access to Care
Patients’ Freedom of Choice
Competition
Exercise of Professional Judgment
11
12
Anti-Kickback Statute
Federal anti-kickback law generally prohibits the provision of any economic benefit in exchange for the referral of patients or business that will be reimbursed under any Federal health care program.
42 U.S.C. § 1320a-7b(b).
Anti-Kickback Statute
Penalties
• Criminal fines & imprisonment
• Civil money penalty of $50,000 plus 3X the amount of the remuneration
• Exclusion
• False Claims Act liability
13
Anti-Kickback Statute
Prohibited Conduct
• Knowing & willful
• Solicitation or receipt -or-
• Offer or payment of
• Remuneration – directly or indirectly, overtly or covertly, in cash or in kind
• For referring patient -or-
• For inducing the purchase or lease of items or services -or-
• For arranging for or recommending the purchase or lease of items or services
• Paid for by a Federal health care program 14
CMP – Reduce or Limit Services
Prohibited Conduct
• Hospital (or critical access hospital)
• knowingly
• making payments, directly or indirectly
• to physician
• as an inducement to reduce or limit MEDICALLY NECESSARY services
• to Medicare (Parts A or B) or Medicaid patients
• under the physician’s direct care
42 USC 1320a-7a(b)
15
CMP – Reduce or Limit Services
Big change
• Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)
• Signed April 16, 2015
• OIG previously interpreted CMP to apply to any effort to induce physicians to reduce or limit current medical practices at the hospital (including medically unnecessary care)
• MACRA Limits the CMP to MEDICALLY NECESSARY services
• CMP of $2,000 per patient covered by the improper payment
• Both Hospital and Physician liable
Enforcement
• OIG discretion
• No private right of action
17
Avenues for Avoiding CMP
• Payment limits medically unnecessary care
• What is medically unnecessary?
• Payment not made by hospital
• Payment not made to physician
• Payment does not apply to patients covered under Medicare (Parts A or B) or Medicaid
• Payment does not cover patients under the physician’s direct care
CMP – Reduce or Limit Services
18
Stark Physician Self-Referral Law
The federal Stark physician self-referral law generally prohibits a physician from making referrals to an entity for any of eleven (11) designated health services if the physician (or an immediate family member) has a “financial relationship” with the entity.
• 42 U.S.C. § 1395nn
19
Stark Law
Penalties
• Denial of Payment (from anyone)
• $15,000 per service
• 2X damages
• Exclusion
• False Claims Act liability
20
Stark Law
Physician may not refer:
• Medicare [or Medicaid] patients
• For “designated health services”
• to an entity with which the physician or
• an immediate family member has
• a “financial relationship”
• Ownership interest – through equity or debt
• Compensation arrangement
• Unless the relationship fits in an exception
21
Stark Law
Relevant exception:
• Employment
• Personal services arrangement
• Fair market value
• Indirect compensation arrangement
• Risk sharing arrangement
22
Stark Law
Avenues for Avoiding Stark Law
• Payment not made by hospital or other DHS entity
• Payment not made to physician (or immediate family member)
• Create entity
23
Special Advisory Bulletin on Gainsharing
64 Fed. Reg. 37,985 (July 14, 1999)
OIG said: “appropriately structured gainsharing arrangements may offer significant benefits.”
OIG initially understood to say that all gainsharing arrangements between hospitals and physicians were impermissible
• Violated CMP against hospital payments to reduce or limit services
OIG said it could not provide “any regulatory relief ... absent further authorizing legislation.”
24
Gainsharing Advisory Opinions
OIG has issued a series of advisory opinions on gainsharing
OIG acknowledged: “Properly structured, arrangements that share cost savings can serve legitimate business and medical purposes.”
25
Gainsharing Advisory Opinions
OIG Concerns:
• Stinting on patient care
• “Cherry picking” healthy patients and steering sicker (and more costly) patients to hospitals that do not offer payment
• Payments to induce patient referrals
• Unfair competition among hospitals offering payments to foster physician loyalty and to attract more referrals (a “race to the bottom”)
26
Gainsharing AO Safeguards
Identified Cost Savings. Specific cost-saving actions and resulting savings were clearly and separately identified to allow public scrutiny and individual physician accountability.
Credible Medical Support. Credible medical support that cost savings recommendations would not adversely affect patient care. Plus, periodic reviews of impact on clinical care.
• Key under CMP changes
27
Gainsharing AO Safeguards
Limited Impact on Federal Health Care Programs. Payments based on surgeries regardless of payor. Federal health care program procedures subject to cap. Cost savings based on actual acquisition costs.
Protections Against Inappropriate Reductions in Service. Baseline thresholds established through the use of objective historical and clinical measures to protect against inappropriate reductions in service.
28
Gainsharing AO Safeguards
Savings from Inherent Clinical and Fiscal Value. Savings from product standardization based on “inherent clinical and fiscal value.” Physicians would have access to the same selection of devices.
Patient Disclosure. Hospital and the physician groups provide patients with written disclosures about the arrangements.
29
Gainsharing AO Safeguards
Limits on Incentives. Financial incentives reasonably limited in duration, amount, and scope.
Protections Against Disproportionate Cost Savings. Physician groups distribute profits on a per capita basis, thus limiting any incentive for individual physicians to generate disproportionate cost savings.
30
Commercially reasonable/FMV compensation based on independent appraisal
Cost savings tied to specific protocol/cost savings activity. Measured based on existing volume (no incentive to change volume)
Ensure quality is measured and maintained
Transparency and disclosure to patients
Monitor change in case mix (protect against steering away more costly patients)
31
Factors Important to OIG
Not limit physician’s ability to make medically appropriate patient decisions
May condition payment on certain physician choice, but must allow access to same supplies and devices as available previously
Not induce physicians from other hospitals to join medical staff – must be a member of medical staff at outset of program
32
Factors Important to OIG
Traditional Gainsharing
Clinical Co-management Arrangements
Bundled Payments
• Bundled Payments for Care Improvement (BPCI) program
• Comprehensive Care for Joint Replacement (CJR) program
How is healthcare provided at a lower cost while maintaining a high standard of care? • Reduction in direct costs
• Supplies and staffing costs
• Better quality care resulting in lower utilization of current system (e.g., LOS) and reduced readmissions • More on-time starts and faster room turnover • Lower infection rates • Better documentation (EMR, coding) • Meeting national quality benchmark standards (e.g., AMI core
measures) • Reduce drug adverse events • Reduce duplicate/marginal tests
Business Considerations
55
Service area covered • Cardiology, orthopedic surgery, anesthesiology • Full surgical care
Physician participation • Full participation may not occur at outset • Services provided on a group or individual basis
Setting metrics • Developed independently or in conjunction with participating physicians • Goals are definable and measurable
• Identifying comparable systems and accessing data Measuring success
• Tools in-place to successfully track on a perpetual basis Compensation once measures are achieved
• Compensation based on predefined goals (e.g., current cost per encounter) and allocation method (e.g., 50% of cost savings)
• Incentive is weighted toward improvement at beginning and then moves toward performance relative to peer group • Weighting can be maintained to emphasize improvement
Developing a Gainsharing Arrangement – Business Considerations
56
1. Fair market value means the value in arm’s-length transactions, consistent with the general market value.
2. ‘‘General market value’’ means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement.
FMV Definition
57
Usually, the fair market price is the price at which bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquisition, or the compensation that has been included in bona fide service agreements with comparable terms at the time of the agreement, where the price or compensation has not been determined in any manner that takes into account the volume or value of anticipated or actual referrals.
With respect to rentals and leases described in § 411.357(a), (b), and (l) (as to equipment leases only), ‘‘fair market value’’ means the value of rental property for general commercial purposes (not taking into account its intended use). In the case of a lease of space, this value may not be adjusted to reflect the additional value the prospective lessee or lessor would attribute to the proximity or convenience to the lessor when the lessor is a potential source of patient referrals to the lessee. For purposes of this definition, a rental payment does not take into account intended use if it takes into account costs incurred by the lessor in developing or upgrading the property or maintaining the property or its improvements.
FMV Definition
58
Comparison to appropriate base of comparable hospitals
Appropriately calculating cost savings per encounter
Assigning to a single physicians to avoid double payment
FMV Considerations
59
Time spent by physicians on various tasks necessary to improve quality of care and reduce cost of care, including but not limited to:
• Researching medical device and pharmaceutical use, cost, and alternatives
• Educating patients and staff on medical devices and pharmaceuticals
• Reviewing with patients procedure and post procedure care (including patient follow up)
• Reviewing complications and developing strategies to improve
Cost Approach
60
Relationship to all other agreements with a physician:
• Clinical staffing agreement
• Call coverage agreements
• Medical directorship agreements
• Department/division chair agreements
• Physician lease/lease-back agreements
Allocation of value among participating physicians within a medical group
Engagement of valuator by counsel to obtain benefit of attorney-client privilege to facilitate discussion of preliminary issues without waiving privilege
